Banking with Principles? - BankTrack .Banking with Principles? Benchmarking Banks against the UN

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Transcript of Banking with Principles? - BankTrack .Banking with Principles? Benchmarking Banks against the UN

  • Banking with Principles?Benchmarking Banks against the UN Guiding Principles on Business and Human Rights

    Second edition June 2016

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    Author: Ryan Brightwell, BankTrack

    Contributors: Johan Frijns, BankTrack; Andreas Missbach, Berne Declaration

    Design and layout: Raymon Van Vught, BankTrack

    Cover Image: Adapted from Chris Eason, CC BY 2.0

    Use and copyright: This report is in the public domain and may be freely quoted or otherwise used, provided that the source is mentioned.

    Support future BankTrack research on Human Rights: BankTrack is seeking grants and donations to support the continuation of its human rights campaigning, including the next update of Banking with Principles? and the Human Rights Impact Briefing series. For more information or for a full funding proposal, please contact us.

    Key findings ...................................................................................................................... 3Summary table of results .................................................................................................. 4Results .............................................................................................................................. 6

    Overview ...................................................................................................................... 6Changes from 2014 ....................................................................................................... 7Category 1: Policy commitments ................................................................................... 7

    Box I: Eleven new human rights policies since December 2014 ..................................................7Category 2: Due diligence commitments ......................................................................... 8Category 3: Reporting ................................................................................................... 9

    Box II: Risks to whom? ................................................................................................................... 9Box III: Current good practice in human rights reporting .................................................... 10

    Category 4: Access to remedy ....................................................................................... 11Box IV: GRI requirements and grievance mechanisms ................................................................11

    Results by region .............................................................................................................12Box V: Human rights impacts of banks ........................................................................................ 13

    Methodology ...................................................................................................................14Closing remarks ..............................................................................................................16Appendix I: Further resources on banks and human rights ..............................................17Appendix II: Full table of results ......................................................................................18Appendix III: Criteria for half and full scores ..................................................................19Appendix IV: Banks in scope by asset value ........................................................................21

    Contents

    mailto:contact@banktrack.org

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    Key findings June 2016 marks the fifth anniversary of the unanimous endorsement by the UN Human Rights Council of the Guiding Principles on Business and Human Rights. This report assesses to what extent banks have integrated the Guiding Principles into their operations over the past five years. It identifies some positive developments since the first version of this report was published in December 2014, but also finds that the overall level of implementation remains poor.

    We benchmarked 45 of the largest banks globally against a set of 12 criteria, based on the requirements of the UN Guiding Principles. These criteria are grouped into four categories: policies, due diligence commitments, reporting and access to remedy. Our key findings are that:

    Most banks are less than half way towards full implementation of the Guiding Principles. 35 of the 45 banks assessed (78%) scored less than 6 points out of a possible 12, indicating that they are implementing about half of the requirements of the Guiding Principles. Given that the Guiding Principles represent a baseline of UN-endorsed responsibilities, we regard this as a poor level of implementation after five years.

    Many laggards; no true leaders. We categorised banks which scored up to a quarter of the available points as laggards; those which scored more than a quarter and up to a half as followers, and those which scored more than half and up to three quarters of the points as front runners. There were 24 laggards, 13 followers and eight front runners. The true leaders category, for banks scoring more than three quarters of the available points, remains an empty field.

    Banks are making progress, but slowly. Of the 30 banks assessed in both 2014 and 2016, 15 banks increased their scores, while 13 remained the same, and two banks dropped points. Most increases were small. The average score achieved by these 30 banks was 3.6, a small increase from the average of 2.9 they recorded in 2014. The average score across all 45 banks was 3.4.

    There are three alarming gaps in implementation by even the front runners. Several requirements from the UN Guiding Principles are not being met by even front runner banks. These are: including meaningful consultation with potentially affected people in due diligence; ensuring reporting on specific human rights impacts is good enough to evaluate the banks response; and establishing grievance mechanisms that meet the effectiveness criteria of the Guiding Principles. On these three counts, all banks are failing to meet their responsibilities.

    The link between good policies and good implementation appears to be weak. When these results are compared with BankTracks two recent Human Rights Impact Briefings, which asked banks to account for how they address specific human rights impacts linked to their finance, we find that banks which scored better are more likely to make better disclosures. However, the link is not strong, with some laggards and followers showing better disclosure than some front runners.

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    Summary table of results Front runners Policy Due dil. Reporting Remedy Total Change

    True leaders 9.5 12 points

    None

    Front runners 6.5 9 points

    Rabobank 3 2.5 2 0.5 8 1

    Citi 3 2 2 0.5 7.5 2

    ANZ 1 2.5 2 1 6.5 1

    Barclays 3 2 1 0.5 6.5 3

    BNP Paribas 3 1.5 2 0 6.5 1.5

    Credit Suisse 3 2 1 0.5 6.5 =

    Deutsche Bank 3 2 1 0.5 6.5 5

    UBS 3 2 1.5 0 6.5 =

    Followers 3.5 6 points

    Nordea Bank 3 1.5 1.5 0 6 New

    Unicredit 3 1.5 1 0.5 6 0.5

    Commonwealth Bank of Australia 3 1.5 1 0 5.5 New

    ING Group 3 2 0.5 0 5.5 =

    RBS Group 3 1.5 0.5 0 5 1

    Wells Fargo 3 1 1 0 5 3

    Westpac Banking Corp 3 1 0.5 0.5 5 New

    Commerzbank 2 1.5 1 0 4.5 1

    Intesa Sanpaolo 1 1 1.5 0.5 4 New

    JPMorgan Chase & Co 2 2 0 0 4 =

    Banco Santander 3 0.5 0 0 3.5 0.5

    BBVA 2 0.5 0.5 0.5 3.5 0.5

    Ita Unibanco 2 0 0.5 1 3.5 New

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    Front runners Policy Due dil. Reporting Remedy Total Change

    Laggards 0 3 points

    BMO Financial Group 2 0 1 0 3 New

    Caixa Econmica Federal 2 0 1 0 3 New

    Goldman Sachs 2 1 0 0 3 =

    HSBC 2.5 0 0.5 0 3 2

    Mizuho Financial Group 1 1 1 0 3 1.5

    National Australia Bank 1 0.5 1 0.5 3 New

    Socit Gnrale 1 0.5 0.5 0.5 2.5 1.5

    Banco do Brasil SA 1.5 0.5 0 0 2 New

    Crdit Agricole 1.5 0.5 0 0 2 =

    Lloyds Banking Group 2 0 0 0 2 New

    Morgan Stanley 1 1 0 0 2 =

    Bank of Nova Scotia 1 0 0.5 0 1.5 New

    Standard Chartered 1 0.5 0 0 1.5 0.5

    Banco Bradesco 0 0 1 0 1 New

    Bank of America 0.5 0.5 0 0 1 0.5

    Crdit Mutuel / CM11-CIC Group 0 0 0.5 0 0.5 New

    Industrial & Commercial Bank of China (ICBC) 0 0 0.5 0 0.5 =

    Royal Bank of Canada 0.5 0 0 0 0.5 New

    Sumitomo Mitsui Financial Group 0 0 0.5 0 0.5 =

    Toronto-Dominion Bank 0 0 0.5 0 0.5 New

    Agricultural Bank of China 0 0 0 0 0 =

    Bank of China 0 0 0 0 0 =

    China Construction Bank Corporation 0 0 0 0 0 =

    Mitsubishi UFJ Financial Group 0 0 0 0 0 0.5

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    ResultsOverview

    The UN Guiding Principles on Business and Human Rights (the Guiding Principles) were unanimously endorsed by the UN Human Rights Council in June 2011. While they have weaknesses as well as strengths, they provide the clearest expression yet of the international communitys expectations of the human rights responsibilities of business.1

    This report aims to establish whether banks are fulfilling the responsibilities established by the Guiding Principles. To determine this, we evaluated the human rights policies, processes and reporting of 45 banks against a set of 12 criteria in four categories: policies, due diligence commitments, reporting and access to remedy. The criteria are based directly on the text of the Guiding Principles. For each criterion, we assigned a full, half or zero score, resulting in a total score out of 12. Banks researched in this study achieved a range of scores between 0 and 8 out of 12, with an average score of 3.4. Details of the methodology are included in the Methodology section. The full results of the benchmarking exercise are provided in Appendix II, and a full explanation of the criteria for a full and a ha